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  • Holly Glowaty

Flourish in a Flash: 2019 Gift Card and Branded Currency Year in Review

Episode Transcript

Please note: Transcripts are computer generated.

Intro 0:04

You're listening to the Flourish in a Flash podcast. With the Flourish team Dez, Holly, Kristen, and Erika

Holly 0:16

Hello everyone and welcome to Flourish in a Flash. And we can't believe it's already the end of the year, holy cow this year flew by. And so much happened in our industry with branded currency that we thought we would use this episode to recap some of the highlights of the year and talk about our predictions for 2020 and beyond. So, we're going to take you guys through kind of all the parts of branded currencies, so buckle up, this is going to be a meaty one, you guys, our Christmas present to you, or whatever your holiday present.

Holly 0:56

So let's start with giftcard right? When we look at branded currency, giftcard is usually the topic we discuss the most. And so I know Kristen, you've been following the ADA and braille story pretty closely. So I don't know if you want to launch into that one.

Kristen 1:14

Yeah, I mean, that was a big topic of conversation this year where several customers were starting to file a class action lawsuits against retailers for not providing braille gift cards. And I think just in general, not even just within the gift card space, but you know, we're starting to see a big focus on ensuring that things are accessible for people with disabilities and certain impairments. So you know, obviously vision impairments are a big one and making sure that we have braille gift cards where people can feel the numbers and make sure that they know kind of what that what that gift card says on it. But also, you know, the focus on making sure that your website and other things are accessible to people with you know, color blindness or you know, just yeah, just different levels of abilities. So making sure that all all elements of your program are accessible and kind of meet ADA standards, I think it's going to be a focus that will continue to see emphasis on the braille lawsuits haven't quite come to a head yet. I don't think we've seen any sort of final resolution on some of those. So that will continue to follow us into the new year and something that we will definitely keep a close eye on.

Holly 2:29

Yep. And, you know, looking at gift card technology, I think this year, we've seen announcements of really cool and interesting uses for gift card tech in non traditional ways. So you know, I mean, the value of a closed loop pre paid product is pretty powerful, right? It's cheaper than running something on traditional rails, it keeps people in your ecosystem. And so I'm excited to see where that goes. I think one of my favorite applications of it had to be Jifiti's point of sale and or there's like their point of sale funding option that they created. I thought that was really cool. They presented about that at Flourish. It was the first time I've really seen someone use gift card tech in that way. So I think we're going to start to see more and more applications there. especially as it relates to my favorite blockchain. I just truly think gift card is a great place to start with blockchain technology for payments, you're not boiling the ocean, we're already a closed loop environment where it's a very blind transaction, its blockchain could enhance this. Do I think this will happen this year? I mean, we're seeing some things out of different companies who are doing this right. But will we see like mass adoption this year? No. We know it's a big transition and migration to move someone off of a traditional traditional rails to, you know, something new like blockchain. And we'd love to do all these point of sale integrations and everything like that. So I'm excited to see where it goes. I really truly think that that could revolutionize our industry. And I'm, I'm very much looking forward to seeing what the next steps look like.

Dez 4:17

And in terms of gift card tech, and you know, the capabilities of gift card, I think a lot of retailers are really starting to understand the power even behind a traditional gift card and what that can unlock for their brand. And this year, we've seen a really big uptick in gift card presence and marketing. Specifically TV spots from you know, brands like Target, Menards, and I think, Lowe's, they've all kind of included gift cards in expensive advertising pieces. And I think that the more retailers kind of push gift card, the more, we start to see the benefits. And that's just going to create a snowball effect.

Dez 5:08

Gift card is no longer, you know, the one thing at the checkout system, but that's just like an afterthought, it's very much becoming the forefront of a lot of retail strategy, both in the classic sense and with what it can kind of turn into.

Erika 5:24

Yeah, and Dez I even I even call the support line one time to try to get ahold of someone because I had a question about a product and they even had it in their recording on their telephone about gift cards, which you know, do many people call like, you know, lines and ask questions, maybe not, but I mean, it just kind of goes in line with what you're saying about more and more marketing and more talk about gift cards in all sorts of locations when it comes to marketing them, which is great.

Holly 5:55

Well, and I think that also, you know, it becoming a bigger part of the story. strategy has also driven the need for better reporting. And I think that is a big trend to watch. we've all talked about it for years, but we are starting to see companies really push the envelope on this, like helping people dive into data that in the US has typically been pretty messy and pretty blind. But I think we're going to start to see more retailers demand more clarity. And especially as you know, I think a shipment could become less of an issue in the future. Not that it won't be still be a bear. But I think we're going to start to see some opportunities here where we can manage against that issue, and actually start to identify who's holding a gift card, which will then in turn, help us with money laundering and all the other issues that we see, you know, pop up due to a lot of the issues that you know, that arise because of achievement. So excited to see people kind of dig into their data, right. I think that's kind of the big the big nugget here is that retailers are starting to use this gift card data and apply it in new and exciting ways.

Kristen 7:09

And I would say data is also another way to help combat fraud, which of course continues to be a conversation part of the conversation. And you know, we are in that time of year where you can't open. You know, your google news alerts about gift cards without seeing the entire thing full of this gift card scam and this gift card scam. And I think we just saw recently the other day about one particular scam that had funneled what $75 million or something crazy like that. So, you know, the more the closer you're paying attention to your data, and your understanding what is normal behavior for your program. I know sometimes the holidays has such a big spike that this gets lost in that noise. But the more that you understand that normal behavior, the better you'll be able to identify what looks abnormal, and therefore could potentially prevent and stop. You know that fraudulent activity

Holly 7:59

I mean, fraud is always a hot topic in our industry. I mean, we always talk about it. But I mean, am I just crazy? Or does it feel like it was just insane this year?

Kristen 8:08

It did, it did feel kind of abnormally huge this year, just the amount of news I was seeing about it, and just in like the dollar value of some of these cases that they were sort of accumulating, I had never quite seen any particular case, you know, quite so large. So that was a that was quite interesting.

Erika 8:30

But, you know, again, creativity of these fraudster is out of control. And it's this they're coming up with some crazy ideas more and more.

Kristen 8:39

Yeah. So continue to be something that we will want to always pay attention to that will never go away. You know, I always like to say if you want to stop, you know, fraud and branded currency, don't sell gift cards, you know, or don't sell anything, quite frankly, on an e commerce, you know, there's a certain level of fraud you have to be comfortable with. But if you're paying closer attention to your data, and you know it's normal, you'll be able to more quickly recognize what's abnormal.

Holly 9:03

Absolutely. Well, and that kind of leads me to a trend we're seeing sort of across several aspects of branded currency, which is using AI and machine learning. So we're seeing that application pretty heavily in the fraud space now. So we can kind of predict we can learn from past behaviors, predict future behaviors, and hopefully, sort of, you know, stop fraud faster. So it's the mitigation of it in the first place, but then also just cutting it off before it becomes rampant. So I feel like we're seeing that in gift card, then we're also seeing really interesting applications of it for promotions and loyalty even. Um, so I think what we're seeing is, again, kind of back to retailers really using that customer data. It's no secret that retailers have a lot of data, but I think sometimes there's just too much like it becomes like, we have it, what do we do with it? You know? So they're kind of getting to a point where I feel like things are getting very specific. And they're saying, Okay, let's apply it in this way. So let's understand how people are going to use specific promotions, or will they walk in and redeem this coupon or offer or reward? And so I'm kind of excited to see where that goes even further. Because I do think there are really smart applications in branded currency in general, for machine learning and AI.

Kristen 10:31

Yeah, one of the interesting things, you know, as you talk about loyalty to you know, I know we've talked a lot about different programs that have had some some buzz this year. And 7/11 is one that I find particularly interesting because I think, you know, with their model being franchisee based, I know that's particularly challenging for a lot of merchants who have that same model, but they were able to have like a really successful rollout of, you know, their loyalty program. You know, do lots of things to kind of really listen to their customers use AI to really look at their customer data and offer personalized rewards and personalized customer journeys. And I think also, their seven now app that basically allows customers to get like a Slurpee delivered like exactly where they're located. I mean, talk about like, contextual commerce and like meeting the customer where they are literally, you know, you could be on the beach somewhere and you could get your Slurpee delivered to you, you know, what, what better situation is there than that? So, I think things like that, we're starting to see a lot more brands and, you know, kind of adopt those those philosophies and, you know, 711, was able to grow their program from 9 million customers to 25 million in two years by really, you know, really capitalizing on some of these trends.

Holly 11:52

Yeah, I love that. I love that they, I mean, they're known for their slurpees, right, like, why not, and it's not an expensive item for them either. You know, ice and flavoring. So, but it is like the big reward and I think that's the thing. It's understanding what to your customers find rewarding, what feels rich without it being insane. And I think, you know, that's something that we're also seeing is that personalization trend right so, um, and I, I always make this I make this point whenever I talk about personalization personalization is not necessarily customization, and I think there's an important distinction to be drawn there. where, you know, I if you like, cherry slurpees that feels personal to you, right? Because it's not blue flavor. I don't know. Is it blueberry or blue? I don't know.

Dez and Kristen 12:48

Blue raspberry.

Holly 12:50

Thank you. Sorry. Again, cherry. I like cherry. Like, listen to your reactions. Like if you guys could have seen the faces as I got that wrong, it was just like uh, blue raspberry. Again, I think I just offended to my team members with my lack of knowledge.There's so much that feels personal to us without it being cumbersome, like, we love your brand, because your brand has provided something. And it means something personal to me as your consumer. So just think about what makes your brand special. And taking that and applying that to your program, make it feel intuitive, if it's what you're known for, and just reward with what you're known for, you know, and so I think more retailers are starting to do that and loyalty and their promotions as well.

Dez 13:43

I think kind of, on the flip side of that when it comes to promotions, you know, we're talking about rewarding behavior, but also how have brands been using promotions to drive certain behaviors. And I think one thing that I've noticed over the last year is a lot of subscription companies using promotions to drive longer, essentially longer subscription links. So what I seen is a brand will show a larger amount like $100 off your first two months of a subscription, but it's split between $50 month 150 dollars, month two. And I've also seen from some of these delivery services, really enticing emails that are like $100 off deliveries, but it's split out over, you know, a handful of delivery pieces, but by using the idea of a larger value and this larger promotional piece that's catching eyes and it's getting engagement, and once someone creates a habit like these spread out values are creating habits that once that promotional value is gone, the person's likely to stay.

Holly 14:57

That's so true. And we're kind of seeing that trend, because of you know, I almost think it's because so many people have started getting into like affiliate programs. Right? Dez you were talking about how you see Rakuten everywhere earlier today?

Dez 15:12

Yeah, I mean, I really feel like they've exploded like Ebates has been around for a while, many, many years. I've been a member for, I think, three or four years. But suddenly, it's become public discussion, like now I see people on social media talking about it. There's always an ad, it's very much become something that people are comfortable with. Whereas I think a couple of years ago, it was something that maybe folks didn't trust. They didn't know how to interact with, but it's becoming this part of the standard shopping experience.

Holly 15:49

Totally. And I think nothing exemplifies that more than PayPal's, you know, acquisition of Honey. I mean, that's huge. We are Looking at you know, a payments company acquiring this other side of branded currency. And it's, you know, it's the promotional value side, which to me is like mind blowing, and really stresses even further, the importance to think about these programs is all like one big branded currency strategy. And I know we've been saying that, since we were, you know, created, but I think it's going to become a much stronger trend. And we're going to I don't know what the terminology will be around it. You know, if people will say branded currency, or branded payments, or you know what the terminology will be in the end, but we're gonna hear it and I think it'll be our job to really keep our eyes and ears open to how people are talking about this evolution, and really bring that to you guys. So I think that'll be a really big focus for us and 2020.

Kristen 16:56

Absolutely, and you guys can't see but I was holding up my Rakuten Big Fat check for $45 and 60 cents from this last quarter. Whoo. I still old school and get like paper checks mailed to me. I really should link it to my paypal account. But that's another day. It is a whole other story. Well, PayPal is on the list to talk about this today, but we'll get to that. But um, yeah, I mean, I love I love rockets and and I do think there's, you know, a lot with these affiliate programs to kind of migrate customer behavior into, you know, a more like traditional kind of loyalty kind of customer and learn from their behaviors in these affiliate programs to really get them you know, a little bit more sticky, you know, into your brand. So, that is very interesting. Um, one thing I forgot to mention on the promo side when we were talking about promos that I found particularly interesting lately, was the promo that delta and BestBuy were doing where if you go into Best Buy and you buy a Delta gift card at Best Buy, you are getting a $25 Best Buy card as like a reward. So I thought that was an interesting kind of co-branded promotion, we talked about that a lot. Like, if you are the kind of brand, like delta is I'm sure that doesn't want to be perceived as like discounting, you know, you can offer another brands branded currency as a reward. And I thought that was just particularly interesting to offer something, you know, in store where like, you go to a brand, like Best Buy, you buy another brands gift card while you're there, and you get Best Buy as branded currency as that incentive or reward. So, you know, just continuing to see more offers like that. And, and I'm sure there's a lot of data science that goes behind that, that they understand who that customer is that's coming into Best Buy that would be attracted to that Delta offer. So it'll be interesting to kind of hear how that perform if we if we do hear about that, but I thought that was an interesting one.

Holly 18:49

Now, when you were making the point earlier that, you know, you like for instance, you form behaviors via Rakuten, right?

Kristen 18:57


Holly 18:58

So how do we take that, transfer that to a brand. That is a discussion that we've been having pretty frequently this year. And I do think we're going to start to see, especially as retailers really dig into their loyalty data. How are you taking those behaviors that are, you know, they're loyal to you, but being rewarded through another channel and capitalize on them. And that, to me is a really fascinating topic to think about and to discuss as we go into 2020.

Dez 19:28

So I have a very unique use case that directly connects to that with Rakuten and a. So it was time for me to get my big rewards check, but Rakuten emailed and said, Hey, you'll get a bonus percentage if you get a gift card. And so I went, and I picked out my gift card, and then it's, it's this one brand who has a very strong relationship with Rakuten, and I go there because I know there's going to be some sort of cash back, I go, I spend entirely too much over the value of the gift card that racketing gave me, but hey, that was free money, right? And then got my cashback and now it's just like I'm in this cycle of this loyal behavior with this one brand who they do have a sort of loyalty program and they have a private label credit card, but I'm not connected to any of that. But I go to that brand because of their relationship with Rakuten.

Kristen 20:26

That is an interesting use case. Yeah. Like the fact that there is that brand has its own standalone program yet, you'd rather just go through racket and probably just because it's makes your life easier.

Dez 20:37


Kristen 20:38

You're still loyal to that brand. You just get to it from a different channel.

Dez 20:42


Kristen 20:43

Interesting, huh. so fascinating. All the different ways that customers use it, like we always say, you know, you build these things and you know, the customers will use it the way they want to use it. It's not always how you intended So, you know, really again, looking at your data and seeing what is that customer behavior, what is that customer journey might really offer some insights that you wouldn't otherwise assume you know about your program about how people are interacting with your brand.

Holly 21:09

So true. Well, and I, I think that's, that's probably like, that's just a great sort of cap on what we're seeing in terms of trends for this year, you know, I mean, it's this evolution of loyalty, this evolution of promotional value and gift cards, the technology, the use of data, and really evolving into branded currency. And I think that is what's so exciting. You know, and as we look ahead, I think the only potential hiccup or roadblock is the unknown. I just have no idea what the CFPB is going to do. Like when it comes down to it. I think we've been kind of on a roller coaster with them and they really do get to have quite the say in what happens in our industry. But it's like, I mean, was it two years ago, Kristen, we were going to have people come in and talk about a prepaid ruling that was supposed to happen, like right before Flourish. And then we had to cancel the panel. Because basically, the CFPB was like, non what was existing, but they didn't, they weren't doing anything any right. And so I just don't know what to expect on that front. And that, I think, is the only thing that like, as I look to the future, that makes me kind of like, I don't know, like, not necessarily uneasy, but I don't know, a better word for it right now. You know?

Kristen 22:35

Yeah, I mean, the updates to Regulation E, which is really about like prepaid accounts that use electronic funds transfer, you know, and kind of understanding kind of what that does, and then updates to Regulation Z, which is like the Truth in Lending Act. That all took effect updates to those rules took effect in April of this year. And you guys might have seen recently, that PayPal Actually suing the CFPB for those rulings, because they're saying, you know, that it's it's sort of unreasonable restrictions to what they consider, you know, their digital wallets and other digital wallets. So, you know, I do think that'll be really interesting to kind of keep an eye on that and see what happens. Because Yeah, for a while there CFPB looks kind of seemed like, you know, it lost all of its teeth. And and then all of a sudden, you know, you're seeing regulations cut, you know, come into effect April this year that, again, were delayed from from previous years that we thought we were going to see final ruling. And now we're hearing about, you know, brands like PayPal really take them to task and say, Hey, I think we really need to do a better job of defining, you know, what these restrictions are and who falls under these digital wallets so that we're not misleading and confusing customers because I think that's where this gray area that's who affects you know, who's affected by this gray area and the ruling because then brands sometimes swing to the other side.To make sure that they're complying and, and, you know, can't offer that same great customer experience that they've always had. So I think that's gonna be interesting to pay attention to and watch more closely.

Holly 24:10

Well, you're totally right, because any other problem that we continually see in legislation is the improper use of industry terminology.

Kristen 24:18


Holly 24:18

And we've said this before, a lot of that is on our industry, we do not have a common vernacular, or you know, we are set definitions we have a common vernacular, but we do not have set definitions of different types of product. And so how are the people legislating supposed to understand that right? But like, you know, one of PayPal's arguments was that like, it doesn't make sense. You're just causing confusion.

Kristen 24:42


Holly 24:43

So you know, how, how can we help, you know, help these lawmakers actually protect consumers? And you know, it kind of kind of back to that escheatment argument— escheatment is great for states and things like that. But it actually doesn't incentivize some of the best behaviors in terms of like, money laundering really, or fraud. And so while they're trying to say like, you know, I love I love the Card Act, because there's no expiration, I think that's fantastic, you know, but with escheatment laws being so varied and so different, and applied some places and not others, and having different rules and restrictions around them, we're just creating other problems that, in my opinion, might be bigger than what they originally trying to solve. So, you know, it's just that kind of stuff that I think will will always be plagued with, right, but how do we combat those? How do we get over those will always be a trend we see and something will be constantly discussing.

Kristen 25:53

Yeah, I mean, the Card Act came out nearly 10 years ago at this point, and I feel like we're still talking about a lot of things, like I think in the particular example with PayPal, like they're fighting against terms like periodic and per purchase and inactivity fee that, again, all don't necessarily tied to their programs. And they're saying that the ruling is mandating that they disclose certain fees that PayPal doesn't even charge. So it's like confusing the heck out of their customers. And they're like, okay, so you're telling me about these fees, but then there are no fees? So, you know, yeah, it's just, it's just kind of crazy. So that's something to kind of keep keep an eye on and, you know, we'll see where this goes. And I don't disagree with PayPal, I think they definitely have some good points, you know, and stuff that we've always talked about as far as like, definitions and making sure that like lawmakers who are who are doing these things really understand our industry better and the terminology in the industry.

Holly 26:48

Yeah. Which in turn will help smaller retailers, specialty retailers, those those that are on e commerce platforms, actually run successful programs and one of our big worries is always that because this is all so confusing. There's going to be a small retailer who isn't complying because they simply didn't know. Right. So, you know, that is something that we're going to be focusing on as we go into 2020. And something we'll be talking about a bit more. So I think we threw a lot of everybody. Yeah.We warned we warned you. This is going to be a meaty one.

Kristen 27:21

Yeah, I think the one last trend I'd like to point out is, is Chipotle's reward program. I think trends like voice is going to be really interesting. And one of the things that Chipotle rolled out recently is the skill on Alexa, for reordering. You know, and with their program. I think that's an interesting one. I think we're going to start seeing more and more loyalty and branded currency behaviors as it relates to voice technology. I know we talked about AI already, but I think...

Holly 27:52

Do you think it will extend to barks? Bark orders.

Kristen 27:55

Annabel has something to say about this topic, you guys so so she's made an appearance on the podcast before, that's my dog. But yeah, so that's kind of the last trend that I think will be interesting to kind of take a you know, just keep an eye on and see how voice effects branded currency in general. So that is our high level look at the things that happened in 2019. And what we think we should keep an eye out for 2020. And as always, you can follow us for all of these tips that we've been gathering over the year at flourishcon .com, download our podcast subscribe, and make sure that you're on our newsletter so you're getting all the latest updates, we always include industry articles and things there. And thanks again for a great 2019 and we look forward to seeing you all in 2020.

Outro 28:43

Flourish in a Flash is produced by K+H Connection, a branded currency consulting firm. You can learn more about K+H at And you can always find out more about Flourish and the Flourish Conference at Follow us on all of our socials, on Twitter, Facebook and LinkedIn it's at flourishcon and on Instagram, it's at flourish_con

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